Schlumberger reports 61.9% Net Income decline and 4.4 pp EBITDA Margin decline from 24.3% to 19.9%
21 Jan 2016 • About Schlumberger (
$SCL) • By InTwits
Schlumberger reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Schlumberger has medium CAPEX intensity: 5 year average CAPEX/Revenue was 9.2%. At the same time it's a lot of higher than industry average of 3.3%.
- CAPEX is quite volatile: 961 in 2015, 2,258 in 2014, 2,255 in 2013, 2,267 in 2012, 699 in 2011
- The company has potentially unprofitable business model: ROIC is at 5.4%
- It operates with high leverage: Net Debt/EBITDA is 2.3x while industry average is -4.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Schlumberger ($SCL) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 36,959 | 41,731 | 45,266 | 48,580 | 35,475 | -27.0% |
| Gross Profit | 8,020 | 8,846 | 9,935 | 11,182 | 7,154 | -36.0% |
| SG&A | 427 | 405 | 416 | 475 | 494 | 4.0% |
| EBITDA | 9,681 | 10,627 | 12,796 | 11,811 | 7,069 | -40.1% |
| Net Income | 4,997 | 5,490 | 6,732 | 5,438 | 2,072 | -61.9% |
Balance Sheet
|
|---|
| Cash | 1,705 | 1,905 | 3,472 | 3,130 | 2,793 | -10.8% |
| Short Term Debt | 1,377 | 2,121 | 2,783 | 2,765 | 4,557 | 64.8% |
| Long Term Debt | 8,556 | 9,509 | 10,393 | 10,565 | 14,442 | 36.7% |
Cash flow
|
|---|
| Capex | 4,008 | 4,694 | 3,943 | 3,976 | 2,410 | -39.4% |
Ratios
|
|---|
| Revenue growth | 34.7% | 12.9% | 8.5% | 7.3% | -27.0% | |
| EBITDA growth | 45.8% | 9.8% | 20.4% | -7.7% | -40.1% | |
| Gross Margin | 21.7% | 21.2% | 21.9% | 23.0% | 20.2% | -2.9% |
| EBITDA Margin | 26.2% | 25.5% | 28.3% | 24.3% | 19.9% | -4.4% |
| Net Income Margin | 13.5% | 13.2% | 14.9% | 11.2% | 5.8% | -5.4% |
| SG&A, % of revenue | 1.2% | 1.0% | 0.9% | 1.0% | 1.4% | 0.4% |
| CAPEX, % of revenue | 10.8% | 11.2% | 8.7% | 8.2% | 6.8% | -1.4% |
| ROIC | 15.3% | 15.7% | 17.3% | 14.3% | 5.4% | -8.9% |
| ROE | 16.0% | 16.6% | 18.1% | 14.1% | 5.6% | -8.4% |
| Net Debt/EBITDA | 0.8x | 0.9x | 0.8x | 0.9x | 2.3x | 1.4x |
Revenue and profitability
The company's Revenue dropped on 27.0% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 4.4 pp from 24.3% to 19.9% in 2015.
Gross Margin decreased on 2.9 pp from 23.0% to 20.2% in 2015. SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign decreased on 5.4 pp from 11.2% to 5.8% in 2015.
Capital expenditures (CAPEX) and working capital investments
Schlumberger's CAPEX/Revenue was 6.8% in 2015. The company's CAPEX/Revenue decreased on 4.5 pp from 11.2% in 2012 to 6.8% in 2015. It's average level of CAPEX/Revenue for the last three years was 7.9%.
Return on investment
The company operates at low ROIC (5.41%) and ROE (5.64%). ROIC decreased on 8.9 pp from 14.3% to 5.4% in 2015. ROE decreased on 8.4 pp from 14.1% to 5.6% in 2015.
Leverage (Debt)
Debt level is 2.3x Net Debt / EBITDA and 2.7x Debt / EBITDA. Net Debt / EBITDA jumped on 1.4x from 0.9x to 2.3x in 2015. Debt jumped on 42.5% in 2015 while cash dropped on 10.8% in 2015.
Valuation
Schlumberger's trades at EV/EBITDA 2.4x and P/E 0.4x while industy averages are 10.5x and 26.1x. The company's EV/(EBITDA-CAPEX) is 3.6x with the industry average at 4.7x.
Appendix 1: Peers in Oil Equipment, Services & Distribution
Below you can find Schlumberger benchmarking vs. other companies in Oil Equipment, Services & Distribution industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Wood Group(John) ($WG.) | 38.7% | 8.0% | -6.0% | 14.3% | |
| Eurasia Drilling Co Ltd ($EDCL) | 52.7% | 17.0% | 7.4% | -14.5% | |
| Greka Drilling Ltd ($GDL) | 80.3% | 39.0% | -49.9% | -20.0% | |
| Mycelx Technologies Corp ($MYX) | 45.4% | 96.5% | 73.9% | -36.5% | |
| Thalassa Hldgs Ltd ($THAL) | 500.9% | 476.9% | 118.1% | -49.2% | |
| |
|---|
| Median (5 companies) | 52.7% | 39.0% | 7.4% | -20.0% | |
|---|
| Schlumberger ($SCL) | | 12.9% | 8.5% | 7.3% | -27.0% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Mycelx Technologies Corp ($MYX) | 46.9% | 53.3% | 56.9% | 52.3% | |
| Thalassa Hldgs Ltd ($THAL) | 98.7% | 35.3% | 30.4% | 42.6% | |
| Greka Drilling Ltd ($GDL) | 21.9% | 20.5% | 28.4% | 25.7% | |
| Eurasia Drilling Co Ltd ($EDCL) | 31.1% | 33.5% | 24.6% | 24.3% | |
| Wood Group(John) ($WG.) | 16.8% | 16.3% | 16.5% | 15.4% | |
| |
|---|
| Median (5 companies) | 31.1% | 33.5% | 28.4% | 25.7% | |
|---|
| Schlumberger ($SCL) | 21.7% | 21.2% | 21.9% | 23.0% | 20.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Eurasia Drilling Co Ltd ($EDCL) | 21.5% | 24.6% | 25.6% | 28.0% | |
| Wood Group(John) ($WG.) | 4.1% | 7.6% | 8.9% | 9.4% | |
| Greka Drilling Ltd ($GDL) | 16.0% | 22.5% | 17.8% | 7.3% | |
| Thalassa Hldgs Ltd ($THAL) | | 13.2% | 16.1% | 4.3% | |
| Mycelx Technologies Corp ($MYX) | -40.2% | -9.7% | 11.0% | -30.3% | |
| |
|---|
| Median (5 companies) | 10.0% | 13.2% | 16.1% | 7.3% | |
|---|
| Schlumberger ($SCL) | 26.2% | 25.5% | 28.3% | 24.3% | 19.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Thalassa Hldgs Ltd ($THAL) | 7.4% | 10.0% | 3.1% | 63.9% | |
| Mycelx Technologies Corp ($MYX) | 13.3% | 25.3% | 35.7% | 22.3% | |
| Eurasia Drilling Co Ltd ($EDCL) | 15.1% | 19.0% | 15.9% | 17.8% | |
| Greka Drilling Ltd ($GDL) | 65.4% | 56.8% | 2.5% | 5.1% | |
| Wood Group(John) ($WG.) | 1.3% | 1.1% | 1.5% | 0.9% | |
| |
|---|
| Median (5 companies) | 13.3% | 19.0% | 3.1% | 17.8% | |
|---|
| Schlumberger ($SCL) | 10.8% | 11.2% | 8.7% | 8.2% | 6.8% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Eurasia Drilling Co Ltd ($EDCL) | 20.3% | 23.8% | 22.8% | 20.9% | |
| Wood Group(John) ($WG.) | 5.7% | 14.0% | 13.3% | 16.0% | |
| Thalassa Hldgs Ltd ($THAL) | 4.1% | 13.4% | 13.8% | -2.4% | |
| Greka Drilling Ltd ($GDL) | 10.5% | 5.2% | -0.3% | -2.9% | |
| Mycelx Technologies Corp ($MYX) | -27.9% | -9.4% | 7.3% | -19.3% | |
| |
|---|
| Median (5 companies) | 5.7% | 13.4% | 13.3% | -2.4% | |
|---|
| Schlumberger ($SCL) | 15.3% | 15.7% | 17.3% | 14.3% | 5.4% |
Top companies by Net Debt / EBITDA
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Greka Drilling Ltd ($GDL) | -0.7x | 0.6x | 1.9x | 2.2x | |
| Eurasia Drilling Co Ltd ($EDCL) | 0.4x | 0.5x | 0.3x | 0.8x | |
| Wood Group(John) ($WG.) | 0.0x | 0.3x | 0.6x | 0.6x | |
| Thalassa Hldgs Ltd ($THAL) | | -1.3x | -6.5x | -26.5x | |
| |
|---|
| Median (4 companies) | 0.0x | 0.4x | 0.6x | 0.7x | |
|---|
| Schlumberger ($SCL) | 0.8x | 0.9x | 0.8x | 0.9x | 2.3x |
